Robert's Blog

Legalization of Hemp and CBD

Recently, some clients have asked that I advise them on the status of regulations on the manufacture, production and sale of Cannabidiol (CBD), which is a substance discovered in 1940 and derived from hemp. Some clinical research has been done on CBD, including studies related to anxiety and pain. CBD most often comes in the form of oil without the more controversial components of hemp.

This short note encapsulates for the reader the results of my review of current law on CBD.


Before 2018, CBD was a “Schedule 1” substance under the Controlled Substances Act of 1970 (CSA), which made it strictly illegal.

The Agricultural Improvement Act of 2018 (the “2018 Farm Bill”), which became law in December of 2018, removed hemp and hemp-derived components from the CSA. The bill defines hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds of it and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not over 0.3% on a dry weight basis.” Thus, all compounds derived from hemp, including CBD, are no longer generally considered illegal, although their use is regulated.

he 2018 Farm Bill gave the U.S. Department of Agriculture (USDA) authority to regulate CBD but allowed the U.S. Food and Drug Administration (FDA) to retain its authority to regulate products containing CBD under the federal Food, Drug and Cosmetic Act (FDCA).

USDA Oversight of Hemp Production

The 2018 Farm Bill requires the USDA to encourage production of hemp. The USDA issued its final rule for hemp production on January 15, 2021, becoming effective on March 22, 2021. The rule allows states and Indian tribes to either submit to the USDA a plan for hemp regulation for approval or agree to submit to the USDA’s general requirements. The USDA has approved the plans of 23 states, 2 U.S. territories, and 41 tribes. According to the USDA final rule, all plans submitted to the USDA must include:

  • a description of the land used for hemp production,
  • sampling and testing procedures for the delta-9 tetrahydrocannabinol (THC) in the hemp crop,
  • a plan for the disposal of hemp containing more than the allowable 0.3% THC,
  • procedures for the inspection of hemp producers and their hemp crop,
  • maintenance of a database with information on state-hemp production, land use, and producer information.

The USDA rule prohibits states from interfering with the interstate transportation of hemp grown under a USDA-approved production plan. But the rule does not govern the marketing, sale, and production of products containing CBD derived from hemp, which authority remains with the FDA.

FDA Oversight

Although the 2018 Farm Bill gave the USDA oversight of hemp production, it left intact the FDA’s authority over cosmetics, dietary supplements, food, and drugs containing CBD. This means that products containing CBD must comply with FDCA regulations.


Under the FDCA, cosmetics containing CBD may be legally marketed and sold if they comply with FDA regulations.

The FDCA defines cosmetics as “articles intended to be rubbed, poured, sprinkled, or sprayed on or introduced into, or otherwise applied to the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance.” Under the FDCA, the main requirements for cosmetics containing CBC are that they not be “adulterated” or “misbranded.”

Under the FDCA, a cosmetic is adulterated if “it contains any poisonous or deleterious substance which may render it injurious to users”; and a cosmetic is misbranded “if its labeling is false or misleading”.

The FDA has issued several warning letters to companies manufacturing products with CBD that the FDA deems misbranded or adulterated. For example, the FDA has questioned the following health claims:

  • “CBD has been demonstrated to have properties that counteract the growth of and spread of cancer.” July 22, 2019, Warning Letter to Curaleaf, Inc.
  • “[P]ossible uses for CBD include helping with skin problems such as acne, autism, ADHD, and even cancer. It’s often used with traditional treatments to provide extra help. Children can use high amounts of CBD safely and without any risk.” October 10, 2019, Warning Letter to Rooted Apothecary LLC.
  • “CBD was administered after onset of clinical symptoms, and in both models of arthritis the treatment effectively blocked progression of arthritis.” March 28, 2019, Warning Letter to PotNework Holdings, Inc.
  • CBD “[m]ay reduce anxiety and depression.” December 22, 2020, Warning Letter to Bee Delightful.
  • “Importantly, CBD products also offer a viable alternative to opioids and other medications that carry strong side effects and the potential for addiction.” December 22, 2020, Warning Letter to New Leaf Pharmaceuticals, LLC.
  • “Our all natural plant-based ingredients, like organic menthol, are strong enough for even your toughest pain.” March 15, 2021, Warning Letter to Honest Globe, Inc
  • “For temporary relief of occasional: . . . minor aches and pains . . . Stiffness of muscles, joints and tissues.” March 18, 2021, Warning Letter to BioLyte Laboratories, LLC.
Food and Dietary Supplements

Unlike cosmetics, the FDA does not allow CBD to be added to food and dietary supplements. This is because, under the FDCA, a food or dietary supplement may not contain ingredients used in an FDA-approved drug product, and CBD has been so approved. In 2018, the FDA-approved CBD as the active ingredient in Epidiolex, a seizure medication for children.

FTC Oversight

Because of its authority over advertising, the Federal Trade Commission (FTC) monitors and regulates marketing of products containing CBD. Advertisements that a product can prevent, treat, or cure human disease are unlawful unless backed up with competent scientific evidence. According to FTC press releases, the agency has fined CBD manufacturers and marketers who have made “unsupported claims that their oils, balms, gummies, coffee, and other goods could treat serious diseases such as cancer and diabetes.”

State Regulation of Hemp and CBD

Although the USDA regulates some aspects of hemp production and the FDA regulates cosmetics, food and dietary supplements containing CBD, there is no complete set of federal regulations for products containing CBD. Perhaps as a result, some states, including Utah, have begun to regulate the sale and marketing of CBD products, including rules for testing and labeling.

CBD Product Labeling and Testing Requirements

Under Utah labeling and testing requirements, a company must ensure that its CBD products comply with these requirements:

  • all CBD products must be registered with the state (this responsibility typically falls on the manufacturer, not the retailer)
  • a Certificate of Analysis for the product’s source of hemp must be provided and include:
    • the CBD and THC levels of the tested hemp plant by dry weight
    • test results indicating any solvents, pesticides, microbials, and heavy metals
    • the hemp batch ID number
    • the date the Certificate of Analysis was issued
    • the testing laboratory’s method of
  • product labels must conform with FDA regulations (that is, no unsupported health claims)
  • product labels must contain a scannable bar code, QR code, or website with a link to the Certificate of Analysis
State Regulation of Hemp and CBD

Although the FDA prohibits adding CBD to food products that become a part of interstate commerce, Utah has legalized the sale and marketing of some food products containing CBD.

Until this conflict is resolved, to avoid the risk of federal enforcement actions, companies manufacturing, producing or selling food products in Utah containing CBD should manufacture, produce, and sell only within Utah and not outside its borders. But always understand: the federal government may find an interstate commerce link – and therefore a basis to override Utah law – based upon a company’s use of the Internet, federal mail service, or product components it receives in interstate commerce, and therefore enforce federal law against a company despite conflicting Utah law.

Navigating the Patchwork of State and Federal Regulations

CBD regulations on both the state and federal levels are evolving; it’s therefore difficult for a company producing, manufacturing or selling CBD to ensure that its products comply with all regulations.

Companies can lower the risk of state and federal prosecutions by taking these steps:

  • ensure that products comply with all FDA regulations, including refraining from making unlawful health claims about products containing CBD
  • avoid adding CBD products to food or dietary supplements
  • review and follow all state regulations about CBD products, including complying with all labeling and testing requirements
  • ensure that all CBD products, and the hemp crop from which the CBD was derived, are tested by a reputable, independent laboratory; and maintain all certificates of analysis and documentation about the testing
  • ensure that claims in all labeling, packaging, marketing, and advertising of CBD accurately reflect any test results and are otherwise substantiated before the claims are made

Until the FDA issues comprehensive regulations, companies producing, selling, or marketing products containing CBD must deal with a hodgepodge of state and federal regulations, which often conflict with each other. Companies can help avoid the pitfalls of these evolving regulations by carefully staying abreast of all new developments.

I hope this short summary helps you better understand the current employer landscape regarding contractors vs. employees.
–Robert A. Youngberg

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